Should You Think About Buying Powell Industries, Inc. (NASDAQ:POWL) Now?
Powell Industries, Inc. (NASDAQ:POWL), is not the largest company out there, but it received a lot of attention from a substantial price increase on the NASDAQGS over the last few months. As a small cap stock, hardly covered by any analysts, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Today I will analyse the most recent data on Powell Industries’s outlook and valuation to see if the opportunity still exists.
View our latest analysis for Powell Industries
What's The Opportunity In Powell Industries?
According to my valuation model, Powell Industries seems to be fairly priced at around 12% below my intrinsic value, which means if you buy Powell Industries today, you’d be paying a fair price for it. And if you believe the company’s true value is $69.86, then there’s not much of an upside to gain from mispricing. In addition to this, Powell Industries has a low beta, which suggests its share price is less volatile than the wider market.
Can we expect growth from Powell Industries?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a relatively muted profit growth of 5.0% expected over the next year, growth doesn’t seem like a key driver for a buy decision for Powell Industries, at least in the short term.
What This Means For You
Are you a shareholder? It seems like the market has already priced in POWL’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on POWL, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. At Simply Wall St, we found 1 warning sign for Powell Industries and we think they deserve your attention.
If you are no longer interested in Powell Industries, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
